21 August 2011
Mr X had discontiued business in PY09-10. In that year he incurred a loss of Rs 3lacs which could not be set off against any income. Along with this there is c/f of loss of PY 06-07 of Rs 35000. In PY 10-11 he recovered bad debts of Rs 40000. My query is 1) Can he use recovery of bad debts for set off of loss pertaining to PY 09-10. OR he can only used for set off of loss pertaining to year of discontiued business and c/f of loss can be set off againsr any other business profit.
21 August 2011
First of all bifurcate the losses in two parts...that is unabsorbed depreciation and the other as losses....and now see the situation....
22 August 2011
In my view , it is compulsory and recommended that the loss of AY 2007-08 should be first set off. . It is not so that the recovery belongs to a particular year can be set off against the loss of same year. . The loss can be set off against any other business income within the stipulated time limit of 8 AY. . I also agree with the expert's advise regarding bifurcation into Dep Loss and Bus Loss.
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